Sample Questions

IC 02 Practice of Life Insurance Mock Tests — 5 random MCQs with answers & explanations

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These 5 questions are randomly selected (standard MCQs only, not case-based).

Q1 A Whole Life Insurance plan is most suitable for an individual who wants to:

  • A. Save for a child's wedding in 10 years
  • B. Leave a legacy or estate for their heirs Correct Answer
  • C. Cover a short-term car loan
  • D. Get the highest possible investment return
Explanation:
Since it covers the entire life, it guarantees a payout whenever death occurs, making it perfect for passing wealth to the next generation.

Marks: 1

Q2 How might an underwriter handle an application if they determine the risk is higher than normal?

  • A. Reject the application
  • B. Accept the risk with a "lien"
  • C. Both A and B are possible Correct Answer
  • D. Accept the risk at normal rates
Explanation:
When risk is high, underwriters may either decline the application or accept it with restrictions, such as a lower sum assured or a lien.

Marks: 1

Q3 The value of one unit in a ULIP, calculated by dividing the total net value of the fund by the number of units, is the:

  • A. Sum Assured
  • B. Vested Bonus
  • C. Net Asset Value (NAV) Correct Answer
  • D. Surrender Price
Explanation:
NAV fluctuates daily based on the market performance of the stocks or bonds in which the fund is invested.

Marks: 1

Q4 What are the primary goals that a life insurance provider aims to achieve for its customers?

  • A. Managing and covering life risks
  • B. Offering a systematic way to save money
  • C. Ensuring financial safety for old age or emergencies
  • D. All of the above Correct Answer
Explanation:
Life insurance is not just about death cover; it also helps people save for the future and provides financial security during retirement or unexpected life events.

Marks: 1

Q5 Which type of insurance plan pays out a portion of the sum assured to the policyholder at regular intervals throughout the policy term?

  • A. Retirement Planning
  • B. ULIPs
  • C. Money Back Plan Correct Answer
  • D. Endowment Plan
Explanation:
"Money Back" plans are designed to provide liquidity. They return specific percentages of the total insurance amount to the policyholder every few years while the cover continues.

Marks: 1

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